Nevada homeowners that want to stop foreclosure on their primary residence have several foreclosure prevention strategies at their disposal. Real estate financing in Nevada most frequently relies on deeds of trust to secure the title to a property in a trust until the lender is repaid in full. Nevada Revised Statutes, Chapter 107.030 deals specifically with the creation of trust deeds and real estate financing. While other real estate financing methods are available in the state, in practice, trust deeds are the most cost efficient means of recovering a property in default, which means most lenders will use this method. Any foreclosure prevention action will first require understanding the terms of your trust deed or other security instrument attached to a mortgage, and in addition, homeowners facing default must realize all of their legal options in order to make an informed decision regarding the best method to stop foreclosure in Nevada.
Maintain Homeownership by Frank Communication with Your Lender
It is usually in the best interest of a lender to provide temporary relief to homeowners facing default, which will allow the homeowner to fulfill their loan obligations later. Loss mitigation departments of lenders have been swamped with foreclosure claims, and in turn, are not readily prepared to make the best use of the real estate they obtain from non-judicial foreclosure proceedings. Consumers should readily consult with their lender about their financial status and ability to meet mortgage obligations. Perhaps surprisingly, your lender probably can help more than anyone can. Some of the following options often offered by loss mitigation departments of lending companies to consumers struggling to the keep up with home payments include:
- Loan modifications or refinancing, which can slightly adjust the terms of an existing lender-consumer agreement such as rates, length, or terms, or a enter into an entirely new loan with consumers with more favorable rates, terms, and principle amounts
- Forbearance requests, which if offered by your lender, will allow a consumer to make partial or no payments for a set length of time, with the provision the monies owed will be repaid at a later time
The aforementioned options offer consumers the best chance at remaining in their home in the long-term, while reducing the immediate financial pressure that may threaten their ability to do so.
Look into Your Eligibility for Federal Housing Program Assistance
In light of the recent outcry over lending practices and the wave of foreclosures, the federal government has offered several helpful programs and initiatives to consumers. These programs mainly address primary residence owners struggling to keep their homes, and not all consumers will be eligible. However, the counselors at the Department of Housing and Urban Development will know if these or any other federal programs may prove applicable to your situation. A few of the most notable federal programs and initiatives dealing with foreclosure prevention include:
- The Mortgage Forgiveness Debt Relief Act of 2007, which provides tax beneficial status to certain homeowners who have had debt forgiven by a lender, which would normally fall under an IRS category of taxable income
- The HOPE for Homeowners Act, which promotes adjusting variable rate mortgages into fixed, thirty-year mortgages that are backed by the FHA
- The Homeowner Affordability and Stability Plan, which offers certain homeowners the ability to refinance their existing home loans at lower, fixed rates
Using Short Sale to Prevent an Impending Foreclosure
Though it may not allow an individual to remain in their home, a short sale is an effective method of stopping foreclosure proceedings, paying off and having forgiven existing mortgage debt, and if possible, potentially deriving income from the sale. Here’s how it works: A homeowner facing default will on their own accord seek a buyer of their property. The potential buyer of the property offers a homeowner leverage when negotiating with a lender, who in turn, may agree to allow the sale of the property to proceed for a given sale price and allow any outstanding debt not covered by the sale to be forgiven. This forgiven debt in a short sale will most likely be non-taxable now, per the Mortgage Forgiveness Debt Relief Act. Especially in the case of a short sale, having legal counsel is crucial, given the negotiations required and formal agreements needed to ensure all parties follow through with agreed upon procedures.
Using a Deed in Lieu of Foreclosure to Prevent Foreclosure Proceedings
If a short sale is not feasible, most likely because there are no interested buyers, a lender may simply accept ownership of a property in exchange for all outstanding debt obligations related to the property, which is known as a Deed in Lieu of Foreclosure. In Nevada, a lender retains their rights as a beneficiary of the deed of trust, while agreeing to forgive all outstanding debt obligations. Again, using legal counsel here is important, because homeowners do not want to be stuck with a deficiency judgment or other obligations following the loss of their home.
Using Bankruptcy to Stop Foreclosure in Nevada
A final measure to stop foreclosure, at least temporarily, is through bankruptcy. Any bankruptcy filing, whether Chapter 13 or Chapter 7, puts a temporary automatic stay on all collections attempts by creditors. Additionally, within the bankruptcy process, debtors and their legal counsel can negotiate the repayment of certain debts under Chapter 13, or alleviate most debts under Chapter 7. Certain homestead exemptions do exists for retaining one’s primary residence in Chapter 7, but not many persons qualify. However, a Chapter 13 filing that negotiates a much more favorable repayment plan on a given mortgage, as well as reduces the pressure from all other debt obligations, may allow one to keep their home.
Getting Legal Help and Protecting Your Legal Rights in Nevada Foreclosure
Every state has dozens of companies and other credit repair agencies eager to assist with consumers and their potential foreclosure, but beware; these companies cannot assist you in any manner, and will simply take your money. The first step to protect your legal rights in foreclosure cases would be by consulting with an HUD-approved counselor in the state of Nevada, while actively looking into an attorney or lawyer that can assist you in the preventing foreclosure. With a HUD counselor and an attorney representing your interests, only a favorable outcome can be the result, which depending on the extent of debt owed and how soon before default sets in on a given loan, may mean the difference between saving a primary residence, being forced to sell, or at worst, going through foreclosure.
